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Posted on 05/22/2012 7:21:26 PM PDT by Kaslin
The euro zone isn't the only economy reeling from "failed states." The United States has several of its own — most notably California and Illinois.
According to the CIA's world factbook, California's economy is the ninth largest in the world with a gross state product of $1.9 trillion. Illinois' economy is the world's 23rd largest economy with a gross state product of nearly $630 billion.
These are impressive figures, to be sure, but both states have seen their global position slip in recent years — and further erosion is likely thanks to poor fiscal stewardship and anti-competitive tax increases.
Both California and Illinois are hoping that tax hikes will bridge gaping deficits created by politicians' failure to rein in government growth — including expanded entitlements and exorbitant public sector pensions.
Does any of this sound familiar? It should. This is precisely the sort of unchecked public sector growth that has landed Greece in its current predicament — a worsening crisis that has pushed the entire euro zone to the brink of collapse.
"Public payroll expenses (salaries and pensions of civil servants) rose in Greece from 38% of state revenue in 2000 to 55% in 2009," reports Antonis Kamaris of the Council on Foreign Relations. "Compounding this trend, local elites became hostile to any coherent national reform effort, precisely to preserve the system that now privileged them."
(Excerpt) Read more at news.investors.com ...
There are three essential problems with Greece and it’s status. First, the political “lords” that ran the country for the past forty years...saw the revenue pot as unlimited, and just gave away the money. Second, salaries, benefits and pensions continued every year to climb at a unsustainable level. Third, people eventually learned how to get around taxes or just quietly walked away.
These are all issues which California faces currently. I think if you took a dozen political figures from California to Athens, Greece....for two weeks...they might actually see lots of comparisons in what went wrong there and how it relates to their own situation.
It is foolish to single out any state “as failed” when compared the federal government which really is failed. California is a piker in comparison. The whole country is on economic fire and people want to point to smoking California as the problem. That’s missing the burning forest for the smoking tree. The problem starts in Washington DC.
“It is foolish to single out any state “as failed” when compared the federal government which really is failed. California is a piker in comparison. The whole country is on economic fire and people want to point to smoking California as the problem. That’s missing the burning forest for the smoking tree. The problem starts in Washington DC.”
Right you are! This is the money comment in this thread! I want California to go bust ( and I am a Californian), but I am betting that the US will beat CA to bankruptcy.
“...they might actually see lots of comparisons in what went wrong there and how it relates to their own situation.”
Actually, the only comparison they would be able to see would be that other people, mostly rich ones, are to blame for all of their problems and that high-taxes, big deficits, and huge public sector employee drains on the economy are not.
Another reason why Scott walker shouldn’t have a problem holding on - Wisconsin voters only have to compare what he has done for them compared to what the folks in Illinois voted for. Ousting him ensures they become another Illinois.
But if they did that by correcting the most serious spending, the public union pensions & perks, they may not get re-elected.
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